Elon Musk Planned to Risk Half His PayPal Fortune on Mars With No Safety Net
Investor Ray Dalio urged him to keep a cushion, and learned how differently Musk thinks about money and risk.
My First Million · Ray Dalio: The one thing I do differently before investing a single dollarRay Dalio remembers sitting down with Elon Musk just as Musk was starting Tesla, the electric car company, and hearing a plan that sounded reckless even to a professional risk taker.
Musk had made something like $180 million from PayPal, the online payments business, Dalio recalled. His plan was to take about half of it and use it to try to go to Mars, a field in which he had no experience.
This is a story about two different ways of thinking about money and risk. Dalio, the investor who built the hedge fund Bridgewater from a $4,000 loan from his father into what he calls the "most successful hedge fund in the world," thinks constantly about how to get the upside without the downside. Musk wanted the upside and brushed aside the downside.
Dalio made a practical suggestion. Set aside a little money first, he told Musk, so that if the Mars bet did not work out, Musk would still have something to live on.
Musk said no. Dalio recalls him answering flatly, "No, I don't need it."
What struck Dalio was not just the size of the bet, but the indifference to security behind it. Making money was not a big deal for Musk, Dalio said. He did not need a house, he did not need security, and he did not even need the modest level of comfort that Dalio himself wanted. Dalio added that the compulsive thrill of climbing toward something huge was his own personality type, too.
That attitude was different from Dalio's. His own goal had been freedom money, enough to cover the basics and keep living if the business shut down. The interviewer put Dalio's later fortune at something like $20 billion, but Dalio did not dwell on the number. He said he overshot his needs simply because he played a game he loves, and one that pays well if played well.
In refusing the cushion, Musk was acting in keeping with his nature, fixed on turning a picture in his head into something real. Dalio calls people like that shapers, a very small share of the population driven "to go from visualization to actualization," and he counts Musk, Microsoft co-founder Bill Gates, and Netflix co-founder Reed Hastings in that group.
For Dalio, the lesson was not to copy Musk. It was to know your own nature, and to build around it.
Questions people ask
Did Musk lose all that money?
He nearly did. Both Tesla and his rocket company, SpaceX, ran desperately low on cash in 2008 and almost failed before Tesla closed a funding round and SpaceX won a $1.6 billion NASA contract. Those rescues kept Musk solvent and let him keep his stake.
Why did Musk want to go to Mars?
Musk has said he wants humanity to become a multiplanet species so that life can survive if Earth suffers a catastrophe. SpaceX is building its Starship rocket to carry people and cargo there, though no crewed Mars landing has happened yet.
What does Dalio mean by a shaper?
In Dalio's language, a shaper is someone who visualizes something big that does not yet exist and then leads the building of it, from broad vision down to tiny details. He uses Musk, Microsoft co-founder Bill Gates, and Netflix co-founder Reed Hastings as examples.